Will there be reduction in tax rates under old regime? Nirmala Sitharaman’s response: ‘Not compelling anyone to…’

“We are not compelling anyone to move,” she said, highlighting that more 78% of taxpayers have already opted for the new regime. Under the new regime, tax rates have been lowered, and the standard deduction has been increased to ₹75,000 but the old regime remains unchanged.

“We brought the standard deduction into the new regime after listening to what people wanted,” she said.

She said, “I understand the view that some rate reductions in the new system should apply to the old regime, but we have kept the changes specific to the new scheme.”

Emphasizing the government’s goal to streamline the tax system for all, the finance minister said that the intention was to simplify direct taxation further.

Nirmala Sitharaman explained that the government has been working to simplify direct taxation since 2019, adding, “The attempt has been to make the process simpler, which is why a new regime was brought in with lower rates. We gave the option to taxpayers that if they preferred exemptions, they could remain with the old scheme.”

She also noted that while the new scheme initially offered no exemptions, the government added standard deductions to accommodate taxpayer needs, explaining, “In the July budget, we revisited this and further reduced rates for the middle class, while also increasing the standard deduction.”